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 April 4, 2004 Commentary
(weekend edition)-
For today's commentary I will
continue with some follow up on the plays that I have been watching in here. I
understand that this may be a bit boring for some of you, but I get a fair
amount of requests asking that I keep up with the follow up on plays that I
post. I do the best I can to balance new things with follow up on the things
that I have already posted. If all I do is post new things, we don't get to see
how some of theses things play out, and what I might be doing with
them.
I'll start out with the most amazing of all the plays. In a sense I
'got lucky' on this one. Let me quote a few lines from my commentary back on
March 21,
2004.
"I was hoping to get a break of the lower median line, and then a
retest from below. Recall that the area highlighted by the horizontal lines was
my potential trade area. I wasn't able to get an entry due to the gap, and I
was looking for another way to use the setup. CI never gave me a chance, as it
didn't break down below the line to any significant degree. I mentioned that I
was wondering if I shouldn't have been thinking about a long trade. After all,
CI was a full eleven dollars below that trade area."
"Now, you
tell me, was the higher probability event a breakdown some eleven dollars below
the short trade area, or the lower median line, with the time symmetry and the
.618 retracement test, long trade?"
Shortly after that commentary CI gave me
another chance to get long. Let's take a look at how it looked right at that
time.
CI continued to smoothly roll up and down
along that lower median line. It came right back to the line after that last
commentary and bounced twice off it. It began to go up, and then gave a nice
pullback entry. Take a look on a 15-minute chart to see the detail of the
behavior, or even a 60-minute chart if you don't want such a fine view.
Let's look at
how this has played out on the daily chart since this entry. CI really likes
those median lines.
As I said, this play had a bit of a 'luck
factor' in this huge pop. Sometimes that happens, and sometimes it goes against
the trade. That's trading. This type of 'luck' helps offset the last time when
it went the other way. CI has gone right through the center median line. Now I
wait and see if it continues up, or begins to drop below this line. I am now in
management mode. And yes, I did take some off on this pop.
Let's move on
to SUNW, where I got 'lucky' again. Let's look at a chart showing the areas
where I played to the short side, and where I covered.
The first arrow shows the approximate area
where I went short, and the second arrow shows the approximate area where I
covered the last part of the play. This one was clearly not breaking down
anymore. I just about scratched this one net (after taking a small amount off
on the first move down), not wanting to stay with it as it went against me. It
was a good start, but then they just started to come for it.
Let's see
what happened shortly after.
We all know about the big news that popped
this thing. I was very 'lucky' to be out. If I weren't out already, I would
have just had to take my lumps. It happens, and that's trading.
I'll finish
with a look at AMZN.
The first arrow shows the approximate area
where I got in the first time. The second arrow shows the approximate area
where I closed the final part of the play out, at a small net overall profit.
The third arrow shows where I took my second shot, after AMZN tested the entire
grouping, just as I mentioned in a previous commentary that I suspected it
would. Keep in mind that I was watching the lower timeframes for entry triggers
(not just here but on all my trades), some of which were classic Fibonacci
pattern setups.
This trade, too, is now in the management phase. I jumped early and
made a small profit. If AMZN hadn't come back down, that play would have looked
great. AMZN did come back down, and I gave it time to fully test the entire
area. It was quite clear when it had 'done its thing' and was starting up. Take
a look at a 60-minute chart and see if you can tell where I may have gotten in.
Put 5 and 15-minute moving averages on the chart. Focus on bar closes. It's
pretty easy to see what I was watching for; it's right out of Kane Trading on: Entry
Techniques.
I'm still in the SCH trade (that's a whole column unto
itself), although a rapid scale out has begun on that one. I'm also playing
with the DAL play, off that setup that I presented. Perhaps I will show some of
those in a future commentary. On another note, Kane Trading on: Multiple
Timeframes and 'Context' is coming along very well, and I'm hoping to get
to the proofreading stage soon. I'll let everyone know when it's ready. I am
very, very happy with how it is turning out so far, and I think it will be
immensely helpful.
The next commentary will be the mid-week edition, which
I hope to have posted on time on Wednesday. Keep in mind that this is a
holiday-shortened week, and there is no trading on Friday.
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